Maddison v Qualtime Association Inc
[2010] FMCA 25
•22 January 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| MADDISON v QUALTIME ASSOCIATION INC | [2010] FMCA 25 |
| PRACTICE AND PROCEDURE – Discontinuance – Jurisdiction to permit setting aside of Notice of Discontinuance. PRACTICE AND PROCEDURE – Discontinuance – Discretion to permit Notices of Discontinuance to be set aside. PRACTICE AND PROCEDURE – Jurisdiction of the court – whether Federal Magistrates Court has inherent or incidental jurisdiction. |
| Federal Magistrates Act1999, ss.3, 15 Federal Magistrates Court Rules 2001, rr.1.03, 1.06, 11.08, 11.11, 13.01, 16.05 Family Law Act1975, s.21 Federal Court of Australia Act1976, ss.5, 23 Commonwealth Electoral Act1918, s.93(8) |
| Australian Health Insurance Association Limited v Esso Australia Pty Ltd (1993) 116 ALR 253 Parsons v Martin (1984) 5 FCR 235 DJL v Central Authority (2000) 201 CLR 226 CDJ v VAJ (1998) 197 CLR 172 Re Macks; ex parte Saint (2000) 204 CLR 158 Hunter v Leahy (1999) 91 FCR 214 VTAG v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 141 FCR 291 SZEHH v Minister for Immigration [2005] FMCA 1692 Applicant A26 of 2002 v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCA 1050 Applicant NACT of 2001 v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCA 316 SZIHB v Minister for Immigration [2006] FMCA 472 Applicant NACT of 2001 v Minister for Immigration & Multicultural & Indigenous Affairs Applicant NACU of 2001 v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 1444 SZFOZ v Minister for Immigration and Citizenship [2007] FCA 1137 Christodoulou v Disney Enterprises Inc [2006] FCAFC 183 Bailey v Marinoff (1971) 125 CLR 529 Permanent Trustee Co (Canberra) Ltd (as executor of Estate of Andrews) v Stocks & Holdings (Canberra) Pty Ltd (1976) 15 ACTR 45 Tresize v National Australia Bank Ltd (1994) 50 FCR 134 Deputy Commissioner of Taxation v Chamberlain (1990) 26 FCR 221 D’Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1 R v Burrell [2008] 248 ALR Re The Kronprinz (1887) 12 App Cas 256 Ninatoca Pty Ltd ATF The Fagence Investment Trust & Anor v Kovari Professional Pty Ltd ATF The Kovari Professional Trust & Ors [2008] FMCA 947 Taylor v Johnson (1983) 151 CLR 422 L v Human Rights and Equal Opportunity Commission [2006] FCAFC 114 |
| Applicant: | FELICITY DEIRDRE MADDISON AS LITIGATION GUARDIAN FOR JACQUELINE ELAINE MADDISON |
| Respondent: | QUALTIME ASSOCIATION INC |
| File Number: | BRG 1038 of 2007 |
AND
| Applicant: | FELICITY DEIRDRE MADDISON AS LITIGATION GUARDIAN FOR DAVID JOHN MADDISON |
| Respondent: | QUALTIME ASSOCIATION INC |
| File Number: | BRG 1039 of 2007 |
| Judgment of: | Wilson FM |
| Hearing date: | 24 July 2009 |
| Date of Last Submission: | 3 August 2009 |
| Delivered at: | Brisbane |
| Delivered on: | 22 January 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr Pratt |
| Pro Bono Solicitors for the Applicants: | Clayton Utz |
| Counsel for the Respondent: | Mr Liddy |
| Solicitors for the Respondent: | Thynne & Macartney |
ORDERS
The application in a case filed 15 May 2009 is dismissed.
The applicant is to pay the respondent’s costs to be taxed if not agreed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRG 1038 of 2007
| FELICITY DEIRDRE MADDISON AS LITIGATION GUARDIAN FOR JACQUELINE ELAINE MADDISON |
Applicant
And
| QUALTIME ASSOCIATION INC |
Respondent
AND
BRG 1039 of 2007
| FELICITY DEIRDRE MADDISON AS LITIGATION GUARDIAN FOR DAVID JOHN MADDISON |
Applicant
And
| QUALTIME ASSOCIATION INC |
Respondent
REASONS FOR JUDGMENT
On 15 May 2009 the applicant in each matter filed an Application in a Case seeking an order for the setting aside of a Notice of Discontinuance filed in each matter on 29 May 2008. That was the only relief claimed. The relief sought by each applicant is deceptively simple. However, in order to decide whether each applicant is entitled to the relief sought, the Court is required to determine fundamental issues of jurisdiction, power and discretion of this Court that have not, to my knowledge, been the subject of previous detailed consideration either at first instance or on appeal.
On 24 July 2009 these two matters were ordered to be heard together.
Before turning to the facts of these two matters, it is necessary to first consider and determine whether this Court has the jurisdiction, and the power, to set aside a Notice of Discontinuance. By the filing of the Notice of Discontinuance in each case, the proceedings were brought to an end. The jurisdiction of the Court as originally invoked, in these cases by the Human Rights and Equal Opportunity Commission Act 1986, ceased. Each applicant filed an Application in a Case. However, there was no “case” in which to bring an application. Rule 13.01 Federal Magistrates Court Rules deals with discontinuance. There is no statutory provision either in the Federal Magistrates Act 1999 or in the Federal Magistrates Court Rules 2001 that expressly permits the Court to set aside, or allow the withdrawal of, a Notice of Discontinuance.
Although this Court is exhorted to operate informally, and to use streamlined procedures (FM Act 1999 s.3; FMC Rules 1.03, 1.06) it cannot act unless it has jurisdiction to do so. As a statutory Court, it will be a question of construction as to whether or not the Court is expressly or impliedly invested with jurisdiction by another Act. In Australian Health Insurance Association Limited v Esso Australia Pty Ltd (1993) 116 ALR 253 Black CJ drew a distinction between the grant of jurisdiction and the grant of a power that could be used in the exercise of jurisdiction. At [47] his Honour said:
“There is a distinction between the conferral of jurisdiction and the grant of a power. Jurisdiction in this context means the authority a court has to decide a matter and power goes to the exercise of that authority. Without authority there can be no valid exercise of power: St Justin’s Properties Pty Ltd v Rule Holdings Pty Ltd (1980) 40 FLR 282 at 284; Parsons v Martin (1984) 5 FCR 235 at 240-1.”
In Parsons v Martin, in the passage cited, the Full Federal Court said:
“In its strict sense the term “jurisdiction” means:
“. . . the authority which a court has to decide matters that are litigated before it or to take cognisance of matters presented in a formal way for its decision” (Halsbury’s Laws of England (4th ed, 1975), vol 10, par 715.)
The expression “inherent jurisdiction” has come to be used, not so much to refer to the authority of the court to decide matters before it but rather to describe the power which a court may have, independent of statutory authority, express or implied.
In Australia, with its federal system, there is in truth no court of unlimited jurisdiction though the term continues to be used.
. . .
In our opinion a court exercising jurisdiction conferred by statute has powers expressly or by implication conferred by the legislation which governs it. This is a matter of statutory construction. We are of the opinion also that it has in addition such powers as are incidental and necessary to the exercise of the jurisdiction or the powers so conferred.
In view of the way in which the phrase “inherent jurisdiction” is used in many of the cases, it seems advisable generally to avoid the use of it to refer to this incidental and necessary power of a statutory court.”
The issue of jurisdiction was relevantly considered by the High Court of Australia in DJL v Central Authority (2000) 201 CLR 226. There, the Court considered the jurisdiction of the Family Court. By s.21 Family Law Act 1975 that Court is constituted as a superior court of record. The Federal Court enjoys the same status: s.5(2) Federal Court of Australia Act 1976. This Court does not. A question that arises is whether that difference in status has any effect on the implied incidental or necessary power referred to in Parsons v Martin.
In DJL the majority justices said, at [25]:
“The Family Court is thus not a common law court as were the three common law courts at Westminster. Accordingly, it is “unable to draw upon the well of undefined powers” which were available to those courts as part of their “inherent jurisdiction”. The Family Court is a statutory court, being a federal court created by the Parliament within the meaning of s. 71 of the Constitution. A court exercising jurisdiction or power conferred by statute “has powers expressly or by implication conferred by the legislation which governs it” and “[t]his is a matter of statutory construction”; it also has “in addition such powers as are incidental and necessary to the exercise of the jurisdiction or the powers so conferred” [citing Parsons v Martin (1984) 5 FCR 235 at 241]. It would be inaccurate to use the term “inherent jurisdiction” here and the term should be avoided as an identification of the incidental and necessary power of a statutory court.
See also CDJ v VAJ (1998) 197 CLR 172 at 197, and Re Macks; ex parte Saint (2000) 204 CLR 158 at 177-8, 235-6, 274-5.
In Hunter v Leahy (1999) 91 FCR 214 at 219 -20 French J (as his Honour then was) said:
“It is accepted that courts of law and equity have general powers now accepted as an established part of their armoury to prevent the abuse or frustration of their processes in relation to matters coming within their jurisdiction. The power to grant such relief in relation to a matter in which the Federal Court has jurisdiction is conferred expressly by s. 23 of the Act: Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 623 per Deane J. As Deane J went on to say in that case:
“Indeed, even in the absence of the provisions of s. 23 the Federal Court would have possessed power to make such orders in relation to matters properly before it as an incident of the general grant to it as a superior court of law and equity of the jurisdiction to deal with such matters.”
Although the term “inherent jurisdiction” was used to describe such a power in courts of general jurisdiction, it is better described in a statutory court as an implied power, of which Bowen CJ at first instance in Jackson v Sterling Industries Ltd (1986) 69 ALR 92 at 97 said, in comments with which Deane J expressly agreed (at 624):
“In relation to a statutory court such as the Federal Court it is wise to avoid the use of the words ‘inherent jurisdiction’. Nevertheless a statutory court which is expressly given certain jurisdiction and powers must exercise that jurisdiction and those powers. In doing so it must be taken to be given by implication whatever jurisdiction or powers may be necessary for the exercise of those expressly conferred. The implied power, for example, to prevent abuse of process, is similar to, if not identical with, inherent power.”
In VTAG v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 141 FCR 291 the Full Federal Court dealt with the jurisdiction to set aside orders made by consent. At [30] the Court considered that the extent of the Court’s incidental and necessary powers are shaped by s.5(2) Federal Court Act. Their Honours said:
“In consequence, the Court’s “incidental and necessary powers” are “no less in relation to the jurisdiction vested in it than the inherent power of a court of unlimited, or general, jurisdiction”: Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 619 per Wilson and Dawson JJ.”
The question that arises is whether the Federal Magistrates Court, which like the Federal Court is a statutory court, but which is not conferred the status of a superior court, enjoys the same “incidental” jurisdiction as the Federal Court. In the passages just extracted from Hunter v Leahy and VTAG v Minister the possession of an implied or incidental jurisdiction is by language tied to the status of the Federal Court as a superior court. However, in Parsons v Martin the Court was there dealing with a court of summary jurisdiction, and the same principle was applied. In DJL the High Court expressly cited Parsons v Martin.
I conclude therefore that, like the Federal Court, the Federal Magistrates Court has, in addition to its expressly conferred jurisdiction, such implied jurisdiction as is incidental and necessary to the exercise of the jurisdiction otherwise conferred on it. I therefore reject the submission of the respondent that this Court does not have any “inherent jurisdiction”.
In Hunter v Leahy French J referred to s.23 Federal Court of Australia Act as the basis of power to make orders under the incidental jurisdiction. Section 15 FM Act is in relevantly the same terms. I therefore conclude that the Federal Magistrates Court has the same power as the Federal Court to make orders necessary for the exercise of its incidental jurisdiction.
Does this incidental jurisdiction extend to the power to set aside a Notice of Discontinuance? In this Court I have found two earlier decisions which answer that question in the affirmative.
In SZEHH v Minister for Immigration [2005] FMCA 1692 Lloyd-Jones FM decided that this Court has power to set aside a Notice of Discontinuance “pursuant to Rule 16.05 of the FMC Rules 2001 as part of its inherent power to prevent injustice if the circumstances are made out” citing Applicant A26 of 2002 v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCA 1050 per Mansfield J at [5]; Applicant NACT of 2001 v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCA 316 per Jacobson J at [4]. With respect to his Honour, he has conflated two separate potential sources of jurisdiction. However, Rule 16.05 does not confer the power to set aside a Notice of Discontinuance because there is no “judgment or order” of the Court. His Honour held that there was power if it was necessary to prevent injustice.
In SZIHB v Minister for Immigration [2006] FMCA 472 Driver FM reached the same conclusion, on the question of “inherent jurisdiction” without any analysis of the basis of that jurisdiction.
It could not be said that either of the two Federal Court decisions relied upon by Lloyd-Jones FM were an unqualified endorsement of the power to set aside a notice of discontinuance. I put to one side the decision in Applicant A26 of 2002 because in that case the Notice of Discontinuance was filed by mistake
In Applicant NACT of 2001 v Minister for Immigration & Multicultural & Indigenous Affairs Jacobsen J said:
[2] The first question which arises is whether I have power to set aside the notice of discontinuance. The applicant relied upon a decision of Cox J in Fowler v Renmark and Paringa District Hospital Inc (1988) 51 SASR 506. However, that was a case in which the notice of discontinuance was filed in error. So too was the decision of Mansfield J in Applicant A26 of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 1050 at [5].
[3] In FAI General Insurance Co Ltd v Southern Cross Exploration NL [1988] HCA 13; (1988) 165 CLR 268 Gaudron J referred, at [7] of her judgment, to the remarks of Barwick CJ in Bailey v Marinoff [1971] HCA 49; (1971) 125 CLR 529 at 530. His Honour there observed that it would not promote the due administration of the law or the promotion of justice for a court to have a power to reinstate a proceeding of which it has finally disposed. Gaudron J referred at [9] to the distinction between orders operating by way of a final determination of the matters in issue and orders dismissing proceedings but leaving it open to a party to commence fresh proceedings.
[4] Although a real question arises as to whether in light of the principles to which I have referred, I do have power to reinstate the appeal, I am prepared to proceed upon the basis that the court, in an appropriate case, has inherent power to set aside a notice of discontinuance if it is necessary to prevent injustice.
In Applicant NACU of 2001 v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 1444 Hill J was equally doubtful. At [8] his Honour said:
“I do have some misgivings about the issue of jurisdiction. Part of the difficulty lies, I think, in understanding what the real basis for the motion is. Once the discontinuance has been filed, the proceedings are at an end. There is nothing that could at that stage go before a Full Court. While I think that there would exist power in an appropriate case to set aside a discontinuance where justice required that to take place, it is not immediately apparent to me how the application is one that really resides in the Full Court.”
Both Justices seem to have accepted that there was jurisdiction, and then dealt with the applications on their merits.
More recently, in SZFOZ v Minister for Immigration and Citizenship [2007] FCA 1137 at [15] – [20] Ryan J accepts that there is a discretion in the Federal Magistrates Court to permit the withdrawal or setting aside of a Notice of Discontinuance, but does not discuss the matter in any depth. His Honour did say, at [15] that the orders of the Federal Magistrate could be supported on the narrower ground of an absence of power to set aside a discontinuance which has been regularly effected, however that observation was made per incuriam.
In the case heavily relied upon by the applicants before me, the issue of power and jurisdiction was conceded: Christodoulou v Disney Enterprises Inc [2006] FCAFC 183 at [5]. The Court continued:
“[25] There is a line of authority to the effect that the Court has inherent jurisdiction to set aside a discontinuance or abandonment of proceedings if the act constituting the discontinuance or abandonment was a nullity in the eyes of the law by reason of fraud or mistake: R v Moore [1957] 2 All ER 703; R v Essex Quarter Sessions Appeals Committee, Ex parte Larkin [1961] 3 All ER 930; R v Medway [1976] 1 All ER 527.
[27] There is some authority to suggest that the power extends beyond cases of fraud or mistake and that the Court has the power to set aside a discontinuance or abandonment whenever the interests of justice dictate that that is the appropriate course: Applicant NACT of 2001 v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 316; NACU of 2001 v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 1444; Applicant A26 of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 1050.
[28] We think that the Court does have power to set aside a discontinuance or abandonment although we do not need to decide if it goes beyond those cases where the notice of discontinuance is a nullity because even if the relevant test is the interests of justice the exercise of the power is not warranted in the circumstances of this case.”
It is therefore an unresolved issue as to whether the Court has the power to set aside a Notice of Discontinuance in circumstances where an abuse of process or fraud is not established. None of the cases just referred to resolve that matter.
In my view, in resolving that question, some assistance is gleaned from those authorities dealing with the setting aside of a judgment or order entered by consent.
Of course, the general rule was stated by Barwick CJ in Bailey v Marinoff (1971) 125 CLR 529 at 530 in these terms:
“Once an order disposing of a proceeding has been perfected by being drawn up as the record of a court, that proceeding apart from any specific and relevant statutory provision is at an end in that court and is in its substance, in my opinion, beyond recall by that court. It would, in my opinion, not promote the due administration of the law or the promotion of justice for a court to have the power to reinstate a proceeding of which it has finally disposed.”
In Permanent Trustee Co (Canberra) Ltd (as executor of Estate of Andrews) v Stocks & Holdings (Canberra) Pty Ltd (1976) 15 ACTR 45 Brennan J (as his Honour then was) dealt with a consent application to set aside a consent judgment regularly entered. At page 48 his Honour referred to the general rule that a perfected judgment cannot be recalled or varied but noted some exceptions:
“those which are founded upon the inherent jurisdiction of the court to ensure that its procedures do not affect injustice; those which are authorised by statute; and those which override the general rule in order to give relief where the judgment is obtained by fraud or by an agreement which is void or voidable.”
His Honour’s expression of principle widens the categories of case in which a perfected consent judgment can be set aside.
In Tresize v National Australia Bank Ltd (1994) 50 FCR 134 the Full Federal Court considered an application to set aside a consent judgment entered following a compromise of litigation. The appellants argued that they had agreed to the compromise under the undue influence of their legal advisers. Ultimately, the challenge failed, but at page 144 Sweeney and Heerey JJ adopted the conclusion of the judge at first instance that “normally a judgment or order made by consent will not be set aside after it has been entered except on grounds that would enable a contract to be set aside”.
This follows the decision in Deputy Commissioner of Taxation v Chamberlain (1990) 26 FCR 221 at 230 that, as a matter of principle, a court may set aside an order made by consent and intended to carry out an agreement between the parties on any ground on which the agreement itself may be set aside.
Following on from a consideration of these cases, I conclude that where a Notice of Discontinuance has been filed in proceedings that were otherwise within the jurisdiction of this Court, the Court has the jurisdiction and the power to set aside the Notice of Discontinuance in circumstances where:
a)Its filing was procured by fraud or as an abuse of process;
b)It is necessary to ensure that the Court’s process does not cause an injustice; and
c)It was filed pursuant to an agreement that is void or voidable.
The circumstances in which a Notice of Discontinuance can be set aside, ought not, as submitted by the respondent, be confined to circumstances where there has been fraud or an abuse of process.
I do not purport to suggest that this is an exhaustive list of the circumstances in which this Court may intervene, but it is sufficient for the purposes of the disposition of these two matters.
The Court’s assistance ought not be given where a party merely considers that he or she has made a bad bargain and seeks to puruse an action otherwise compromised. In D’Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1 the High Court said at [34]:
“A central and pervading tenet of the judicial system is that controversies, once resolved, are not to be re-opened except in a few, narrowly defined, circumstances”
In R v Burrell [2008] 248 ALR at [16] the majority justices said:
“It is that the principle of finality serves not only to protect parties to litigation from attempts to re-agitate what has been decided, but also has wider purposes. In particular, the principle of finality serves as the sharpest spur to all participants in the judicial process, judges, parties and lawyers alike, to get it right the first time. Later correction of error is not always possible. If it is possible, it is often difficult and time consuming, and it is almost always costly.”
The mere filing of a Notice of Discontinuance does not, of itself, preclude a party from bringing fresh proceedings to enforce the same cause of action (subject, of course, to matters such as statutes of limitation): Re The Kronprinz (1887) 12 App Cas 256 where counsel for the appellants in that case was ‘compelled to admit that an order for discontinuance does not of itself operate as a release or an extinguishment of the claims, or in any other way bar further proceedings’: at 262, a proposition which was embraced by the House of Lords in that case: esp. at 262 per Lord Bramwell.
In these cases, the Notices of Discontinuance were filed consequent upon, and as a term of, a compromise reached by the parties at mediation on 2 May 2008. The parties executed a deed of settlement that required the Notices to be filed after the respondent had published certain apologies. That was done.
However, and importantly, it was a term of the deed of settlement that it could be pleaded in bar to any fresh action. Thus, it is not enough for the applicants to simply set aside the Notices of Discontinuance. They need to go further and impugn the deed of settlement. Otherwise, although the actions will revive, upon the Notices of Discontinuance being set aside, the respondent will be entitled to (and by its counsel plainly foreshadowed its intention to) plead the deed of compromise by way of defence.
It is at this point that the course the Court should take becomes somewhat vexed. The only relief sought in each application is the setting aside of the Notice of Discontinuance. No relief is sought in relation to the deed of settlement. It could be argued that the Court should not set aside the Notices of Discontinuance until the deed of settlement has been set aside. It could be argued that the applicants ought to bring a fresh action to set aside the deed of compromise. Or the applicants could each bring a fresh action seeking the same relief as in the original application filed in these proceedings. That claim would be met with the defence foreshadowed in the preceding paragraph. In either case, the validity of the deed could be challenged. The difficulty for the applicants is that there are strict time limits for the bringing of proceedings under the HREOC Act (s.46PO). It is likely that the only way in which the discrimination complained of in these proceedings can be successfully litigated is if the original proceedings are revived. In that regard, the situation becomes somewhat circular. The Notices of Discontinuance should not be set aside unless one or more of the grounds set out at paragraph [30] above are established; yet the applicants cannot proceed in these matters unless and until the Notices of Discontinuance are set aside.
It would have been preferable if the applicants had challenged the deed of settlement so that both matters could be decided at the same time. It seems to me that, in circumstances where that has not happened, the Court should look to see whether the applicants have an arguable case to attack the deed of settlement. If they do not, then there is no point in setting aside the Notices of Discontinuance. If they do, then the exercise of the Court’s discretion to set aside the Notices of Discontinuance is enlivened and can be exercised.
I approach the question of whether the applicants have an arguable case in much the same manner as I would approach an application to summarily dismiss their claim: see the discussion of the appropriate principles to apply in Ninatoca Pty Ltd ATF The Fagence Investment Trust & Anor v Kovari Professional Pty Ltd ATF The Kovari Professional Trust & Ors [2008] FMCA 947. I will look only at the applicants’ case and see whether it is arguable. I am cognisant that there is a contest on the facts as to a number of important matters, and that witnesses have not yet been cross examined.
Although counsel for the applicants sought to have the Notices of Discontinuance set aside because of the respondent’s alleged conduct, and in the interests of justice, when one examines the arguments, it is really that the applicants should not be bound by the deed of settlement because of those matters. The two matters go hand in hand.
It cannot be said that the Notices of Discontinuance were filed as an abuse of process. Nor, or the evidence presently before the Court, can it be said that the filing of the Notices was procured by fraud, even in the wider, equitable sense of that term.
Having regard to views expressed in many cases, encapsulated in those passages extracted at paragraphs [33] and [34] above, it would not be in the interests of justice to set aside the Notices of Discontinuance unless the settlement deed could also be successfully attacked.
Although it was sought to be put in various ways, the applicants’ argument that the contract that was the deed of settlement was voidable really came down to two points, that were inter-related:
a)The respondent failed to disclose a relevant document;
b)The respondent, by its representatives, misrepresented that there was no policy that governed the right of the applicants to be members of the respondent.
The applicants may also be able to argue that they entered into the settlement agreement under a mistake of fact (that there was no relevant policy) when the respondent knew that they were so acting, knew that they were mistaken, and took no steps to dispel the mistake: Taylor v Johnson (1983) 151 CLR 422.
To understand the applicants’ arguments it is necessary to record the non-contentious background:
a)On 4 December 2007 the applicants each commenced proceedings seeking relief under the HREOC Act. The discrimination alleged was by the respondent depriving each applicant of the right to sign a member’s petition, and withdrawing their right to be members of the respondent. This was because the applicants allegedly lacked the legal capacity to be members and make decisions. Each of these matters is alleged to have occurred in the period January – March 2007. The relief claimed was an apology, the restoration of membership, and monetary compensation;
b)The respondent filed a Response denying acting unlawfully, and denying that either applicant was entitled to the relief claimed;
c)On 8 February 2008 each party was ordered to make disclosure;
d)On 1 April 2008 the respondent filed its List of Documents;
e)On 3 April 2008 orders were made that gave the applicant in each case the opportunity to set out in letter form further documents the respondent was required to disclose and set a time for the bringing of a further application for disclosure;
f)The applicant requested disclosure of particular documents, including those:
“that outlines policies and procedures for conducting decision making capacity assessments . . . “
g)By affidavit, the respondent’s solicitor deposed that there were no documents that fell within that category;
h)On 16 April 2008 the solicitors for the respondent produced to the applicants “policies and procedures located by our client relevant to the proceedings”;
i)There was in existence at the time the proceedings were commenced, and at the time that the solicitor swore her affidavit, a document described as “Qualtime Membership Policy and Procedure document 20/10/07” [hereafter referred to as “the new policy”]. This created a new class of members of the respondent, known as “Friends of Qualtime”, who did not have the right to vote. Those members were those who did not have the legal capacity to vote in Federal, State and Local Authority elections;
j)The new policy was written on 24 September 2007 and approved on 20 October 2007;
k)The new policy was not disclosed to the applicants prior to the mediation, or the execution of the deed of settlement.
The applicants argue that the respondent failed to disclose the new policy. The litigation guardian for each applicant swears that had she known of the new policy, she would not have compromised the proceedings on the terms that she did. This was because, she said, the applicants achieved nothing more from the terms of settlement than they were already entitled to. Each of the applicants was enrolled to vote, and accordingly under the new policy was entitled to membership of the respondent. Further, one of the terms of settlement was that the respondent would review its membership policy. It was contended that this had already been done, by the new policy, so the promise was empty.
The respondent contends that it was not obliged to disclose the new policy. Further, it argues that the applicants have produced no evidence of their legal capacity to vote, and as such of their “entitlement” to membership, whether at the time of the alleged discrimination, or subsequently. The respondent points out that the applicants also received personal, and a published, apology. It submitted that the only relief claimed in the initiating application that was not achieved by the settlement was monetary compensation.
The respondent pointed to the fact that each applicant was represented by a litigation guardian as underscoring their lack of capacity. The need for a litigation guardian should not be taken as an admission of a lack of legal capacity for a particular purpose (such as voting). The circumstances in which a litigation guardian can be appointed are much wider than that.
FMC Rules 11.08(1) and 11.11(1) provide:
11.08 Person who needs a litigation guardian
(1) For these Rules, a person needs a litigation guardian in relation to a proceeding if the person does not understand the nature and possible consequences of the proceeding or is not capable of adequately conducting, or giving adequate instruction for the conduct of, the proceeding.
11.11 Appointment of litigation guardian
(1) The Court may, at the request of a party or of its own motion, appoint or remove a litigation guardian or substitute another person as litigation guardian in a proceeding in the interests of a person who needs a litigation guardian.
In L v Human Rights and Equal Opportunity Commission [2006] FCAFC 114 it was said:
“[23] The law relating to the appointment of a litigation guardian for a person who lacks the requisite capacity to conduct litigation or the capacity to give instructions to a person conducting litigation on their behalf, has a long history. Its origins can be traced back to the prerogative power of the Crown to protect those in need of protection on account of mental incapacity.
[24] The law developed in the context of property disputes. In 1891, Kekewich J observed that it was ‘undoubted’ that the Chancery Division of the High Court had jurisdiction ‘to protect the estates of those who, though not found lunatic, are yet incompetent, by reason of a weakness of intellect, to take proceedings themselves – that is to say, to instruct their solicitors to take proceedings on their behalf’: Howell v Lewis (1891) 61 LJ Ch 89 at 89.
[25] There are valuable statements about the court’s power to appoint litigation guardians in Masterman-Lister v Brutton & Co (Nos 1 and 2) [2003] 1 WLR 1511. In substance, the purpose is to protect plaintiffs and defendants who would otherwise be at a disadvantage, as well as to protect the processes of the court. Kennedy LJ said (at [31]):
‘In the context of litigation, rules as to capacity are designed to ensure that plaintiffs and defendants who would otherwise be at a disadvantage are properly protected, and in some cases that parties to litigation are not pestered by other parties who should be to some extent restrained’.
Chadwick LJ (at [65]) said:
‘The pursuit and defence of legal proceedings are juristic acts which can only be done by persons having the necessary mental capacity; and the court is concerned not only to protect its own process but to provide protection to both parties to litigation which comes before it. A defendant is entitled to expect that he will not be required to defend proceedings brought against him by a person of unsound mind acting without a next friend’.
[26] There is a presumption of competence unless and until the contrary is proved; that is, there is a presumption that a litigant of full age is competent to manage his or her affairs: Masterman-Lister at [17] (Kennedy LJ); Murphy v Doman [2003] NSWCA 249; (2003) 58 NSWLR 51 at [36] (Handley JA). When it is alleged that a person is incompetent, the onus of proof is on those so asserting: Masterman-Lister at [17] (Kennedy LJ); Dalle-Molle v Manos [2004] SASC 102; (2004) 88 SASR 193 at [17] (Debelle J); Andreapoulou v Nowak [2002] VSC 462; Pratt v Dickson [2000] QSC 314.
[27] The means by which the court will determine whether a guardian should be appointed can vary from case to case. In Masterman-Lister, Kennedy LJ said (at [29]) that the decision as to capacity rests with the court but in almost every case the court would need medical evidence to guide it. Earlier, Kennedy LJ had observed (at [17]):
‘even where the issue does not seem to be contentious, a district judge who is responsible for case management will almost certainly require the assistance of a medical report before being able to be satisfied that incapacity exists’.
Cases such as Hutchinson v Gaitazis (1980) 25 SASR 30, AJI Services Pty Ltd v Manufacturers’ Mutual Insurance Ltd [2005] NSWSC 709 and Levey v Levey (1979) 11 BCLR 97 (SC) were decided on medical evidence. There will, however, be cases where no medical evidence is available as, for example, when a litigant refuses to submit to a medical examination. And there will be cases where the lack of capacity is so clear that medical evidence is not called for. In those cases, and perhaps others, the court is entitled to rely on its own observation to make an assessment about the capacity of a party: see, for example Murphy v Doman at [37] (Handley JA); AJI Services Pty Ltd v Manufacturers Mutual Insurance Ltd at [57] (Bell J).
In these proceedings, the initiating application was signed by the applicants’ mother who is their appointed litigation guardian. In those documents she described herself as the applicants’ “guardian”. In her affidavit filed 15 September 2008, the mother said, by reference to Orders of the Guardianship and Administration Tribunal, that she had been appointed the applicants’ guardian for personal matters. The Public Trustee of Queensland had been appointed guardian for financial matters.
The respondent contended that the applicants had failed to produce any evidence of their capacity. The presumption referred to at paragraph [26] in L v Human Rights and Equal Opportunity Commission extracted above would not apply in the present case, because of the orders of the Guardianship and Administration Tribunal. There would be an evidentiary onus on each of the applicants to put on evidence to show that they had the legal capacity to vote. It is not sufficient for the litigation guardian to assert that the applicants are enrolled to vote, or that the respondent’s representatives knew that the applicants voted.
For example, s.93(8) Commonwealth Electoral Act 1918 provides:
(8) A person who:
(a) by reason of being of unsound mind, is incapable of understanding the nature and significance of enrolment and voting; or
(c) has been convicted of treason or treachery and has not been pardoned;
is not entitled to have his or her name placed on or retained on any Roll or to vote at any Senate election or House of Representatives election.
The legal entitlement to vote, which is at the core of the applicants’ argument, presupposes a right to be on the electoral roll. In turn that requires evidence to displace the prohibition set out in subsection (8). On that matter, there is no evidence. As counsel for the respondent submitted, the applicants have had sufficient time to obtain even a cursory medical report addressing the issue. They have not done so.
There is therefore no evidence before this Court that would justify the conclusion that the applicants have an arguable case that, at the date the settlement deed was executed, they had the right to be members of the respondent. Accordingly, the argument that the applicants did not achieve something by the settlement that they were not otherwise entitled to, cannot be accepted. Further, there is no evidence that the applicants had the right to be members of the respondent at the dates of the alleged discrimination, which was before the adoption of the new policy.
More fundamental to the applicants’ prospects of success is the critical fact relied upon by the applicants – the non-disclosure of the new policy. It may be accepted that the new policy existed and was not disclosed by the time of settlement. Without more, it cannot be accepted that the new policy was not disclosed deliberately or dishonestly. The respondent’s witnesses (Moore and Jordan) have sworn affidavits saying why the document was not disclosed. The respondent’s solicitor (Moore) has sworn that even if the document was supplied to him by the respondent, it would not have been disclosed as it was not, in his view relevant. Neither of the respondent’s witnesses was challenged or cross-examined. A Court will not make a finding of dishonesty in the absence of sworn evidence to the contrary unless the witness is given the opportunity to deal with the allegation. Accordingly, the matter is dealt with on the basis that the new policy was not disclosed inadvertently, if it was in fact required to be disclosed.
To be required to be disclosed the new policy would have had to be relevant to the issue in the proceedings before the Court. The concept of relevance in discovery is one that is well known. In this case the new policy post-dated the alleged acts of discrimination. On the applicants’ case as particularised, there was no requirement to disclose the new policy.
If a request was made for the document to be produced for the purpose of the mediation, even though it was not strictly discoverable, it was up to the respondent to decide whether to provide it. The respondent could remain silent. However, the respondent did not remain silent in this case. It positively asserted, by its solicitor’s affidavit, that no such document existed. That was a misrepresentation of the true state of affairs.
However, that is of itself not sufficient to entitle the applicants to success on an application to set aside the settlement deed. The applicants would need to prove both reliance on the representation and detriment. Any reliance must be reasonable. In this case, even though the applicants’ litigation guardian deposes that, had she known of the terms of the new policy, she would not have agreed to the compromise, that statement must be tested against the air of reality. It is an easy statement to make in hindsight.
The litigation guardian deposes to having agreed to the compromise taking into account those factors referred to in her affidavit. In my view, it has not been satisfactorily explained why the new policy would have made a critical difference to the litigation guardian’s decision. Parties settle litigation for a variety of reasons. The applicants still confronted the difficulty that the discrimination alleged by them occurred at a time prior to the adoption of the new policy. The applicants were also obtaining all of the relief they sought, save for monetary compensation. There was still the risk of failure, with the attendant risk of an adverse costs order. All of these matters ought to have been and presumably were taken into account.
At the mediation, both sides were legally represented. The mediation was a protracted one, and the bargaining was hard. I am not persuaded that, on the evidence as it presently stands, the applicants enjoy any reasonable prospects of success in an action to set aside the settlement deed.
Accordingly, the Court should refuse to set aside the Notices of Discontinuance.
In case a different view is taken elsewhere as to my conclusion about the matter just determined, I should state my conclusions on the assumption that the Court’s discretion is enlivened to set aside the Notices of Discontinuance.
A number of matters need to be weighed in the exercise of that discretion.
First, there has been delay. The Notices of Discontinuance were filed on 29 May 2008. The applications to set them aside were filed on 15 May 2009. There is a lengthy delay.
The litigation guardian explains that although she received a copy of the new policy on 29 or 30 May 2008 (contained on a compact disk with a large volume of other documents) it was not until January 2009 that she had cause to read the document. The delay between the discovery of the new policy and the applications being filed in this Court has not been satisfactorily explained.
Secondly, the prejudice to the applicants in not being able to pursue their causes of action must be balanced against any prejudice to the respondent if the applicants are allowed to proceed. Obviously, if the Notices of Discontinuance are not set aside, the applicants will be unable to prosecute the alleged discrimination the subject of their applications. However, the only relief they cannot obtain, having regard to the terms of settlement, is monetary compensation. In the applications that was quantified at between $5,000 and $10,000 for each claim. That might be viewed as an optimistic assessment.
On the other hand, the respondent will have acted pursuant to the terms of settlement, and published the apologies. The respondent does not point to any other tangible prejudice if the actions proceed. Both parties will obviously incur further legal costs, and expend emotional and other resources in conducting the litigation.
Thirdly, one must look at the strength of the applicants’ case. I have formed the view that the applicants’ prospects of success are such that they do not have an arguable case.
Fourthly, the respondent points out that neither applicant has put on evidence that he or she wishes to pursue the matter, nor that they wish to overturn the terms of settlement. However, the litigation guardian is also the applicants’ guardian and I act on the basis that her decisions are those of the applicants. This does not advance the matter one way or the other.
Fifthly, the respondent submits that to allow the Notices of Discontinuance to be withdrawn would detract from the finality of the settlements. Of course, that is right, but the Court will only exercise its discretion to allow such withdrawal if there are compelling reasons for doing so.
Sixthly, the terms of the contract of settlement are fully executed. The parties cannot be placed back into their positions prior to that contract being made (restitutio in integrum is not possible). The apologies have been given and published. The membership policies have been (and presumably continue to be) reviewed. The Notices of Discontinuance have been filed.
In my view, the balance of these factors weighs in favour of not exercising the discretion in favour of the applicants. The inability to pursue monetary compensation, and, perhaps, the vindication of a court victory, ought not counterbalance the expense to both parties of pursuing the litigation, the weakness of the applicants’ case, and the fully executed nature of the contract of settlement.
Each application must be dismissed. Costs should follow the event.
In conclusion, the Court should record its gratitude for the assistance provided by the solicitors and counsel for each applicant who acted pro bono. Without the assistance of legal practitioners who are prepared to give of their time and expertise in such matters, the Courts’ task would be made much more difficult.
I certify that the preceding seventy-six (76) paragraphs are a true copy of the reasons for judgment of Wilson FM
Associate: Lynnette Chin
Date: 22 January 2010
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